Infovide-Matrix 2009 Q3: A Consistent Improvement of Results

(9 November 2009)

For the Infovide-Matrix Capital Group, a leading provider of consultancy services and IT solutions, financial results keep growing after three quarters of 2009. The operating profit increased by nearly 13% up to PLN 11.9 million from PLN 10.5 million in the same period of 2008. The net profit increased by nearly 11% and amounted to PLN 8.56 million compared to PLN 7.7 million last year. At the same time, Infovide-Matrix generated the revenues of PLN 160 million, which means a more than 10% increase in comparison to the similar period of 2008. The sales increase is driven by revenues from services, which constitute 79 % of the total revenues. The good results generated in spite of turbulence on the market are first of all the result of an efficient management system and the service portfolio that is adapted to the changing market conditions.

Since 2009 we have been operating in very demanding market conditions. The improvement in financial results of Infovide-Matrix is caused first of all by a consistent increase in the efficiency and development of services, which are at present valued the most by our customers. Similarly to other IT services providers, we are facing price pressure from recipients of our solutions, but owing to our efficiency improvement methods implemented in the right time, we manage well on the very competitive market and obtain good business results. Previous quarters have shown that we have abilities allowing us to adapt to changing market conditions – Marek Kobiałka, Management Board President of Infovide-Matrix SA said.

The financial results of Infovide-Matrix in PLN thousand are presented in the following table:

Revenues from the sales of services generated by the Infovide-Matrix S.A. Capital Group for 2009 3Q constitute 79% of the revenues from sales. The revenues from sales comprise 48% of sales to the telecommunications sector, 13% to the banking sector, and 13% to the public administration.

Contract backlog for 2009.

The contract backlog for 2009 remains at the same level of contracts signed by the Company in the same period of 2008, when the market situation was still very good. The value of contracts signed for 2009 is PLN 145.9 million. The highest share in the backlog of complex services is for the telecommunications and banking sectors and the public administration.

In spite of turbulent times in economy, our contracts portfolio is still close to the backlog which we had in the times of good market situation. It is worth mentioning that this year – compared to the previous year – the time-frame for the planning of contracts by our clients has clearly been shortened. Good results have also been generated by our activities with the public administration and energy sector. In the 3rd quarter, apart from the existing contracts we also run consultancy projects for the Warsaw City Hall, and we also launched projects for PSE Operator (Polish Power Grid Operator), Vattenfall Distribution Poland and Danfoss. - says Jacek Królik, Vice-President of Infovide-Matrix SA Management Board.

We confirm our intention to continue further development through acquisitions. We talk to companies that can potentially join our Group. We make our decisions dependent on whether or not possible acquisition will ensure the expected added value and increase in the potential of Infovide-Matrix. Our growth strategy is based on consistent building of the Group’s competencies responding to the most important needs and development challenges of our clients. We are determined to provide our clients with a real business value. - Borys Stokalski, Vice-President of Infovide-Matrix SA Management Board, added.

Operating activities

As the core business in the 3rd quarter of 2009, the Company implemented projects in its key sectors.

For the Warsaw City Hall, Infovide-Matrix provided consultancy services under the project 'Preparation of a functional, non-functional and technical analysis for a uniform IT system for the taxes and duties sector in the capital city of Warsaw'. Consultancy included the performance of advanced analytical works, which allowed to determine needs, requirements, dependencies, conditions and abilities that are needed for the construction and implementation of a Uniform Tax System (UTS).

In the telecommunications sector, Infovide-Matrix S.A. continued project works for such clients as Polkomtel SA, TP SA Group, PTC, P4, Polsat Cyfrowy and other telecommunications operators. The implemented projects included but were not limited to the development of data warehouses, billing systems, integration and portal platforms, CRM systems and the implementation of the corporate data model. The Company intensively developed its competences and extended the scope of services provided in the field of key sector competences, such as billing systems, community networks analysis or order management. The point deserving to be emphasized during the last quarters is a continuously growing share in the sector of network solutions: intelligent network platforms, VAS, and innovative services in next generations networks.

In the banking and finance sector, the Company continued works for key banks and financial institutions, related to the provision of consultancy services and implementation of specialized IT solutions. Recently the Central Customer Database at Generali was implemented, portfolio management solutions were implemented in three institutions, and consultancy services in the field of IT change were provided for one of the leading insurers. At the same time, several new projects were also launched: An autodealing maintenance project was launched in one of the leading banks, and a mortgage process maintenance system implementation started in one of the largest banks.

In the energy sector, Infovide-Matrix carried out an analysis of the status of projects management at the IT Department of Polskie Górnictwo Naftowe i Gazownictwo (Polish Oil and Gas Company). As a result of cooperation, mechanisms supporting the development of projects management field were defined. Similar works had been previously performed for ENEA SA and RWE IT Polska. A project concerning the ‘Modernization of the HiP data warehouse feeding mechanisms as well as modernization of analysis areas following changes implemented in the SIRE (energy market IT system)’ was also launched at PSE-Operator in the 3rd quarter. At Vattenfall Distribution Poland, subsequent projects were launched in connection with the implementation of a project data repository and implementation of a system for energy and loss forecasting.

In the industry sector, Infovide-Matrix started a project at Danfoss to provide the client with a self-service system for employees’ leave applications and overtime handling.The solution will be designed, developed and implemented according to individual needs of Danfoss.

Development prospects for Infovide-Matrix

Implementation of significant contracts in the public administration
Infovide-Matrix runs a series of significant advisory and implementation projects supporting transformation that is under way in institutions of public administration in order to considerably support the effectiveness of services provided by those institutions. The largest projects are performed for the Ministry of Interior and Administration, Central Statistical Office, and Social Insurance Institution. The outstanding knowledge of the discipline permits to expect more contracts to be signed between Infovide-Matrix and the public administration.

Offer for the energy sector
The Company prepared a complex offer for energy sector entities, covering the entire portfolio of Infovide-Matrix services starting from consultancy services in the field of IT infrastructure management up to the implementation of core systems for the sector (e.g. customer care and billing systems). The Company gradually performs more project works in this sector, including but not limited to PGNiG, PSE Operator and Vattenfall Distribution Poland.

Management system improvement
In the next quarter of 2009, steps aimed at improvement of the management system were taken at Infovide-Matrix. Through the introduction of a new corporate architecture at the end of 2008, Infovide-Matrix has increased its potential and capabilities in performing large and more complex projects.
The new management rules are based in particular on the following assumptions:

• Building industry structures that allow improving specialized, sector-related competencies.
• Aiming at ensuring the full use of the experience of industry sector experts having technological knowledge
• High concentration of competences within smaller organizational units, co-operating with sector structures
• Better organization of project maintenance
• Focusing on selected, most profitable and prospective areas, with regard to product-related and sector-related offer: telecommunications, banking, public administration, energy
• Implementation of the High Performance Workplace system

Improvement of the management system will strengthen abilities of Infovide-Matrix as a partner of the largest firms and institutions in the efficient performance of strategic transformations.

Infovide-Matrix has yet another time become the leader of the Polish IT consulting market according to IDC Report and took the 9th position in the „Top 10 IT Services Companies by IT Services Revenue Provisioned in Poland” ranking, having 2.0% market share and the respective revenues amounting to USD 69.31 million.

In the 3rd quarter of 2009, Infovide-Matrix obtained the prestigious title of Accredited Consulting Organization (ACO) granted by the British organization APMG. Currently only 23 companies in the world are APMG accredited, only two of them in Poland. The title of Accredited Consulting Organization is not only the guarantee of a high quality of consultancy services provided by this organization, but also the confirmation of qualifications of its consultants. The ACO accreditation allows to meet requirements of clients, who more and more frequently demand a formal proof of the contractor’s ability to implement the project methodology or improve the exiting management solutions.